It isn't out of the ordinary for presidential front-runners to mislead the public when it comes to the federal budget. When a leading journalist gets it wrong on national cable television, that's cause for real concern. In the Republican presidential debate Thursday, Donald Trump gave a flawed answer when asked what he'd do to reduce the deficit. CNN's Jake Tapper compounded the mistake on his show Friday, adding multiple errors on top of Trump's.
— Jake Tapper (@jaketapper) February 26, 2016
Let's take a look at the numbers.
What Trump got wrong
Wolf Blitzer, CNN's moderator in Thursday's debate, asked Trump what he would do to reduce the budget deficit. "Waste, fraud and abuse all over the place," Trump replied. "Waste, fraud and abuse."
The problem with Trump's answer is his implication that incompetent management is the only reason that the government has to borrow money to fund its expenses, and that if federal programs were only run efficiently -- say, by a world-class manager like Trump -- the budget could be balanced.
"Look at what's happening with Social Security," Trump said, to cheers from the audience. "Look at what's happening with every agency. Waste, fraud and abuse."
In fact, outright fraud and abuse are rare. In an audit last year, the Government Accountability Office identified $125 billion in improper payments, most of them reimbursements to doctors who treat Medicaid and Medicare patients or to people wrongly claiming the Earned Income Tax Credit.
To be sure, reducing that total should be a bipartisan goal. Yet even if it were possible to eliminate those improper payments entirely, doing so would not make up for the $9.5 trillion in revenue over the next decade that, according to the nonpartisan Tax Policy Center, the Treasury Department would not collect under Trump's proposal for tax relief.
Tapper cited a similar figure from the Government Accountability Office, but he let Trump off easy by comparing that total to the current annual deficit rather than what the deficit would be under Republican front-runner's tax plan.
As for "waste," it's a term so imprecise as to be meaningless, since there's little agreement on what constitutes waste. By promising to reduce waste, Trump was simply avoiding Blitzer's question: "Where are you going to come up with the money?"
What Tapper got wrong
In his segment, Tapper illustrated this problem with a tendentious statistic.
Tapper cited a figure from Citizens Against Government Waste, a group that tallies up spending it deems wasteful. A recent report from the group identified $639 billion in annual spending on such programs.
Even by that generous estimate, Trump could completely eliminate government waste, and the federal government would still have to borrow money under his tax plan.
Yet a closer look at the figures from Citizens Against Government Waste reveals the problem with this way of thinking about wasteful spending. Among other things, the group calls for eliminating subsidies to sugar, dairy and peanut producers; raising the age of retirement for Medicare and Social Security; throwing out $829 million in money for local police departments and getting rid of most of Amtrak.
The watchdog makes compelling arguments for these changes. Any one of them, however, would be extremely controversial. Saving $639 billion a year would not simply be a matter of efficient, competent management. It would require the political fortitude to make unpopular decisions. Trump, in dodging Blitzer's question, revealed he doesn't have it.
"It all depends on who you ask and what their definition of waste, fraud and abuse is," Tapper said. That's true enough, but then the host made a serious error, repeating a common fallacy about the government's finances.
Many people assume that managing the federal budget is just like balancing their checkbooks for their families, and that the national debt must eventually be paid off, just as a household must eventually pay off a mortgage or a loan on a credit card. The government, though, is very different from an ordinary household.
Take a young family. The parents' earnings might increase for a few years as they win promotions and raises at work. As they approach middle age, though, their earnings level off. Eventually, they'll want to retire. If their debts continue expanding -- if they keep borrowing more and more to pay off interest on a mortgage -- they'll eventually go bankrupt as their debts eat up their incomes.
By contrast, the government's income from taxes will continue to increase as long as the size of the overall economy increases. As a result, the government can keep borrowing money every year until eternity -- just as long as its borrowing doesn't exceed the rate of economic expansion, in which case future generations would have to pay taxes at steeper rates to continue servicing the government's debts.
In other words, the government never actually has to pay off its debt -- ever -- as long the its debt remains modest relative to the size of the economy. Tapper missed this point, offering his viewers a fundamentally mistaken analysis that treated the national debt as analogous to a mortgage on a home.
"Even if Trump's plan were to fix the annual deficit -- and this is the key moment now -- it would do nothing to fix the $19 trillion in long-term debt that already exists," Tapper said.
In fact, if Trump simply eliminated the annual deficit and national debt simply remained stable at $19 trillion forever, U.S. finances would be in very sound shape. Relative to the expanding economy and the government's increasing revenues, that debt would steadily decrease in significance.
Indeed, many economists would argue that the government would be better off borrowing some money every year in order to invest in public projects -- like roads and research -- that make us all better off over the long term.
That's a lot of mistakes for just 93 seconds of television.